Correlation Between CenterPoint Energy and Genie Energy
Can any of the company-specific risk be diversified away by investing in both CenterPoint Energy and Genie Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CenterPoint Energy and Genie Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CenterPoint Energy and Genie Energy, you can compare the effects of market volatilities on CenterPoint Energy and Genie Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CenterPoint Energy with a short position of Genie Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CenterPoint Energy and Genie Energy.
Diversification Opportunities for CenterPoint Energy and Genie Energy
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CenterPoint and Genie is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CenterPoint Energy and Genie Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Energy and CenterPoint Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CenterPoint Energy are associated (or correlated) with Genie Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Energy has no effect on the direction of CenterPoint Energy i.e., CenterPoint Energy and Genie Energy go up and down completely randomly.
Pair Corralation between CenterPoint Energy and Genie Energy
Considering the 90-day investment horizon CenterPoint Energy is expected to generate 0.66 times more return on investment than Genie Energy. However, CenterPoint Energy is 1.51 times less risky than Genie Energy. It trades about 0.33 of its potential returns per unit of risk. Genie Energy is currently generating about -0.05 per unit of risk. If you would invest 2,923 in CenterPoint Energy on August 30, 2024 and sell it today you would earn a total of 343.00 from holding CenterPoint Energy or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CenterPoint Energy vs. Genie Energy
Performance |
| Timeline |
| CenterPoint Energy |
| Genie Energy |
CenterPoint Energy and Genie Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CenterPoint Energy and Genie Energy
The main advantage of trading using opposite CenterPoint Energy and Genie Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CenterPoint Energy position performs unexpectedly, Genie Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Genie Energy will offset losses from the drop in Genie Energy's long position.| CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Exelon | CenterPoint Energy vs. Evergy, | CenterPoint Energy vs. Pinnacle West Capital |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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